Spotify Poses A Serious Challenge To Apple

Spotify CEO Daniel Ek talks music and technology with Eliot Van Buskirk, as SXSW Interactive ends and SXSW Music begins.

Daniel Ek and Eliot Van Buskirk at SXSW Interactive

On the final day of SXSW interactive, Spotify CEO Daniel Ek took the stage with Wired‘s Eliot Van Buskirk to talk about the European music service that could give Apple some serious competition when it finally comes to the US.

The peer-to-peer music service is currently only available in 6 European countries; however there are currently 320,000 paid subscribers, and it is growing by thousands everyday (a beta version is available to US users by invitation only). Spotify streams across peer to peer networks, and users can pay for the service with a subscription, or they can use the service for free with occasional commercial breaks. Spotify works with mobile operators and the service is pre-installed on mobile devices, allowing customers to opt-in when purchasing their mobile phones. He considers it an operational highlight for selling mobile phones.

Ek didn’t announce a US launch, which is what many people in the audience were hoping for; but he did provide some fresh thinking about how the music industry could expand.

“The reality of the music industry is that there isn’t one business model. It’s figuring out how to monetize all distribution methods – downloads, streaming, promotion, ticketing.”

And, he believes that the industry is finally coming around.

“Labels are developing more and more in terms of technology understanding. If people could access music on any device legally, the music industry would be radically bigger.”

Ek demonstrated a slick mobile app that had the audience applauding. Though the application is well designed, it is the philosophy behind Spotify that engages users and outsiders (or, want-to-be users) most.

“We want music to be like water”, he said. “Music that I love I still want to own. I don’t want to own it in the format that it used to be in – a dumb, plastic disc.”

About the US launch, Ek says “We want to build the best possible product we can, and sort out publishing and partnerships. In the US there are almost 5,000 publishers, and it’s complicated.”

About the Apple competition, Ek speculated that they understand things are moving towards a cloud-based model, but didn’t say much more. He’s focused on the development of Spotify, and pointed out that over the next few weeks there will be a lot of new features.

“The big thing right now is working on the next generation of Spotify and getting it out there.”